Three bills aimed at improving ABLE accounts were introduced in Congress on April 4, 2017. These bills were also introduced in the previous session but were not successful in becoming law.
The first bill (the “ABLE Age Adjustment Act,” S. 817/HR 1874) raises the age by which the individual’s disability must have occurred from age 26 to age 46. There is little policy reason for having an age limit at all, except for a policy to have ABLE Accounts only available to those who are disabled primarily not because of advanced age. Age 46 (or even higher) makes more sense than 26 for two reasons. First, many people do in fact become disabled as adults. Second, it is not uncommon to see even profoundly disabled persons in their 40’s and 50’s who cannot produce the medical records establishing that they were disabled prior to age 26 … it was just too long ago.
The second bill (the “ABLE Financial Planning Act,” S. 816/HR 1897) allows rollovers from a 529 Plan to an ABLE Account, to help parents who started to save for college for their young child only to discover later the disabilities that would prevent that from occurring. Even with the rollover, however, the $14,000 annual aggregate contribution limit still applies, so it is not truly a rollover provision; rather, it simply permits the funds to be moved without causing the taxable event that would occur if the parents took the funds back.
The third bill (the “ABLE to Work Act,” S. 181/HR 1896) would allow the working disabled to contribute to their ABLE Account up to $11,770 per year of earned income, in addition to the $14,000 annual contribution limit from all sources.
Mark’s thoughts: While each of these bills has merit, it is important to understand how truly difficult it is for any bill to become law. Our Representatives and Senators work within a system that makes it virtually impossible for them to give the attention needed to everything that deserves their attention. We’ve all heard the expression, “the squeaky wheel gets the grease.” If you want these bills passed, you need to call, mail, email, or fax your Representative and Senators. You would be surprised how few constituent contacts about any particular bill or issue it takes to be “a lot” and get their attention. None of these bills were filed by Massachusetts Representatives or Senators, so you won’t be wasting a call or email to contact them.